STATE OF NEW JERSEY VS. MICHAEL S. HETZELÂ (14-05-1100, ATLANTIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0347-10T1
MICHAEL A. WALTER BUILDERS, INC.,
Plaintiff-Respondent,
v.
BARBARA BEDNAR,
Defendant-Appellant.
_______________________________
Telephonically argued June 3, 2011 –
Decided September 23, 2011
Before Judges R. B. Coleman, Lihotz and
J. N. Harris.
On appeal from the Superior Court of New
Jersey, Law Division, Cape May County,
Docket No. L-553-04.
Keith A. Bonchi argued the cause for
appellant (Goldenberg, Mackler, Sayegh,
Mintz, Pfeffer, Bonchi & Gill, attorneys;
Mr. Bonchi, of counsel and on the briefs;
Rosann Allen, on the briefs).
Stephen W. Barry argued the cause for
respondent (Barry, Corrado, Grassi & Gibson,
P.C., attorneys; Mr. Barry, on the brief).
PER CURIAM
Defendant Barbara Bednar appeals from a final judgment
granting relief to plaintiff Michael A. Walter Builders, Inc.
following a bench trial, and an order dismissing her
counterclaim. On appeal, defendant argues the trial court's
factual findings are not supported by the record and certain
legal conclusions supporting the relief ordered in favor of
plaintiff and in dismissing her counterclaim were reached in
error. We affirm.
These facts are contained in the trial record. Defendant
owned the Heritage Inn Motel in Cape May. Defendant had
obtained architectural and mechanical drawings for the motel's
proposed modifications that were prepared by architect Blane
Steinman, mechanical engineer John Schade, P.E., and structural
engineer Tom Shepard. After reviewing these materials,
plaintiff's principal, Michael A. Walter, drafted estimates for
completion of the job and submitted his "Proposal" dated
November 20, 2003, which was accepted by defendant. In the
contract, plaintiff, designated as "the Builder," would
construct a third-floor addition to the motel and perform other
renovations1 for defendant, designated as "the Customer," for the
agreed sum of $1,037,300.
Certain provisions of the proposal as accepted by the
parties as their contract are relevant to our review. First,
1
Plaintiff had drafted three proposals for defendant, the
last of which was executed by the parties bearing the date of
November 20, 2003 but actually signed sometime in late January
2004.
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the proposal expressly incorporated Steinman's architectural
plans that utilized Schade's mechanical specifications for
thirty-three Mitsubishi "heat pump systems at 14,500 BTUs
cooling."2 Also, the plans required each room to be equipped
with condenser and air handling units from the same manufacturer
with the same energy output of 14,500 BTUs.
Second, the agreement included a payment schedule to
provide fourteen draws. Each draw was in a stated amount and
was due upon completion of various stages of the project.
Third, all renovations and the addition were to be
completed within six months from the date construction
commenced, or by May 20, 2004. The agreement allowed a thirty-
day extension for weather-related delays.
Fourth, additional general provisions: (1) mandated any
changes were not effective "unless in writing, signed by both
Builder and Customer"; (2) required builders' risk insurance be
"provided by [the] Builder to [the] Customer for [the] new
2
A BTU, short for British Thermal Unit, is a basic measure
of thermal energy. One BTU is the amount of energy needed to
heat one pound of water one degree Fahrenheit, measured at its
heaviest point. When speaking of cooling power, the BTU works
in reverse. The air-cooling power of an air conditioning system
refers to the amount of thermal energy removed from an area.
The higher the BTU output, the more powerful the heating or
cooling. http://www.eia.gov/emeu/consumptionbriefs/cbecs/
pbawebsite/office/office_refbtu.htm (last visited August 30,
2011).
3 A-0347-10T1
addition" and the Customer would provide home-owner's insurance
"for [the] existing hotel"; (3) provided the "Builder will
guarantee all workmanship of [the B]uilder and all of [the]
Builder's Subcontractors, for one year from the day of
settlement."
Two additional provisions listed under "Additional Clauses"
must also be mentioned. Subsection (F) stated, in pertinent
part:
Additional work may be performed on hotel.
Cost for work will be priced by Builder and
accepted by Customer. A spreadsheet for
additional items will be provided and
updated by Builder periodically. . . .
Payments for work shall be made the
beginning of each month, during
construction. Ongoing cost for additional
work shall not exceed 2% of the total house
[sic] construction cost, as stated [i]n this
[c]ontract.
Additional work performed will affect the
time of [a]ddition/renovation completion.
. . .
and subsection (J) provided:
Failure to insist upon strict compliance
with any of the terms, covenants or
conditions hereof shall not be deemed a
waiver of such term, covenant or condition,
nor shall any waiver or relinquishment of
any right or power hereunder at any one or
more times be deemed a waiver or
relinquishment of such right or power at any
other time.
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The construction did not proceed smoothly. We will discuss
the dilemmas which bear on the parties' claims in litigation.
As the details of the agreement were ironed out, plaintiff
commenced demolition on November 20, 2003. The first step was
to remove the second floor ceilings, erect scaffolding, and
construct the third-floor "block walls" atop the second floor.
Plaintiff used subcontractors for this job. It was decided the
second floor roofing would be removed and the block for the
third-floor wall would be laid in a piecemeal fashion because of
"weather concerns." Walter explained:
[Y]ou just can't build a wall straight
up and then build the back wall and
then another side wall . . . [i]t has
to be done simultaneously with another
room. . . . Because a block wall might
be up six feet, another block wall
might be up four foot, another one up
two foot. So, it wasn't on a level
plane where we could put boards across
and tarp [the open roof] . . . .
To protect the property from water damage during this
process, plaintiff placed a tarp over the block walls and laid
wooden planks on the tarps to hold them in place. Also, a rope
was woven through the eyelets of the tarps and tied to the sides
of the building.
During November and December 2003, before the new roof was
shingled, three rainstorms occurred. Notwithstanding the
protective measures employed, "[w]hen the storms came through,
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there [were] heavy winds that ripped the tarps off and water got
into the [m]otel." After the first storm in November, plaintiff
added ropes and tarps, but "still the storm[water] got in[,]"
damaging the sheetrock ceilings of the first floor, the first
and second-floor carpeting, and some of the furniture stored in
the first-floor rooms.
Upon discovering the extent of the damage, plaintiff
suggested the parties' submit claims to their respective
insurance carriers. Plaintiff hired subcontractors to restore
the existing structure. This work included installing new
sheetrock on the ceilings and walls; removing the old and
installing new carpeting; repairing bathroom tile damage and
"put[ting] new trim [], new doors, and paint" on the walls. At
the same time, plaintiff continued construction of the third
floor, believing "the insurance companies would take care of the
cost[s]" which the parties would "sort[] out later."
Because of these construction delays, the parties agreed
the new third-floor guest rooms would be finished for the summer
and the meeting room, exercise room, and owner's quarters could
be completed in the fall. Although the third-floor rental rooms
were completed on May 26, 2004, restoration of the first and
second floor rooms was not completed until immediately prior to
the July Fourth weekend.
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Another problem resulted regarding the heating, ventilation
and air conditioning (HVAC) installation. First, plaintiff and
the architect agreed to deviate from the contract
specifications, and installed the condenser units on a
fiberglass deck located on the roof. Consequently, some
condensers were closer to some rooms, "both vertically and
horizontally[,]" than originally designed. Second, plaintiff
learned the Mitsubishi 14,500 BTU condenser and air handling
units specified by the mechanical engineer's drawings were
unavailable as "[t]here was no such thing." Walter consulted
with defendant and outlined the attempts to find a comparable
unit. Defendant expressed concern regarding the efficiency of
any proposed units. On April 7, 2004, plaintiff presented
defendant with three options, set forth in a written "additional
work authorization." On May 4, 2004, defendant chose the second
alternative listed, requesting the proposed units be upgraded to
larger units. She told Walter she desired plaintiff install a
17,000 BTU condenser and Arcoaire air handling units
manufactured by Bryant. Walter inserted this information into
the additional work authorization, which he signed that day.
In July or August 2004, defendant expressed concern that
the air conditioning units were "getting cool too fast and some
mold was being created" in some of the rooms. At trial,
7 A-0347-10T1
defendant asserted she never experienced a mold or mildew
problem in any motel rooms prior to hiring plaintiff. Further,
she expressed that for the first time she began receiving
complaints from guests about dampness in rooms. Plaintiff
observed mold growth which was confined to the first floor and
attributed it to leaky pipes that "weren't pitched properly" in
a downstairs crawlspace. Defendant retained a different
contractor to remove and replace the HVAC units at a cost of
$117,895.98.
The last payment defendant provided to plaintiff -- the
eleventh draw -- was in May 2004. On June 24, 2004, plaintiff
requested the twelfth draw. After plaintiff made three
additional requests for payment, defendant allegedly responded,
stating she had no more money.
Plaintiff filed its two count complaint, alleging breach of
contract and misrepresentation. Specifically, plaintiff sought
payment under the contract for services rendered totaling
$148,100, expenditures for storm damage repairs amounting to
$120,000 and "extras" of $60,694. Additionally, it alleged
defendant fraudulently induced plaintiff to provide services for
which she had no intention of paying.
Defendant denied an obligation to plaintiff and filed a
five-count counterclaim. She asserted breach of contract,
8 A-0347-10T1
consumer fraud, breach of express and implied warranties, common
law fraud, and negligence. Defendant sought rescission of the
contract and return of the $971,705 she had paid plaintiff along
with compensatory damages resulting from plaintiff's failure to
follow the contract's specifications, lost profits, interest,
costs, and attorney's fees.3
The seven day bench trial began on December 2, 2008. In
addition to the parties' testimony concerning the contract and
construction, they each presented fact and expert witnesses.
With regard to the HVAC units, plaintiff offered Jim Berry, the
principal of the HVAC subcontractor, who testified the installed
units were marketed at approximately 17,000 BTUs but as a result
of installation, specifically the length of the refrigerant line
between the condenser and air handler, a loss of capacity
resulted in an average effective BTU capacity of 14,960.
Defendant's expert, Frank A. Vinciguerra, inspected the motel in
December, noting the rooms "were humid, very humid, and many
areas had mold growth within them." He concluded the units were
oversized, caused short-cycling, and had an "inability to
dehumidify spaces." He countered Berry's assertions, opining
3
Defendant later amended her pleadings to include a third-
party complaint against nineteen additional parties, including
the subcontractors and their respective insurers. Each of these
parties settled the claims or were dismissed prior to trial.
9 A-0347-10T1
the reduction in capacity caused by the length of the lines was
irrelevant since "the ability to control humidity" is not the
same as effective cooling.
Defendant also offered expert testimony of Sander J.
Greenberg, who quantified her lost revenue between $140,000 and
$240,000. This was rebutted by plaintiff's accountant, James A.
Stavros, who maintained Greenberg's methodology did not "follow
the standards set forth by the [American Institute of Certified
Public Accountants]" for the calculation of lost profits,
because he failed to specify a "period of loss" and exaggerated
potential lost profits of the motel by including business loses
of another entity owned by defendant.
In a written opinion, the trial judge found defendant, not
plaintiff, unilaterally breached the contract by ceasing the
scheduled payments for completed work. The judge considered the
parties' testimony. He rejected, as incredible, defendant's
assertions plaintiff assumed full responsibility to pay for the
storm damage repair costs and that plaintiff never asked for the
twelfth draw. Conversely, the judge noted plaintiff's principal
was "straightforward and believable," and "kept meticulous notes
and records that record[ed] the dates he requested the next
draw." The trial court described the uncompleted items
discussed by defendant at trial as last-minute "punch list
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items," which would have been completed by plaintiff had
defendant not terminated the agreement and found defendant
failed to mitigate her lost revenue damages by her six month
delay in accepting her contractor's proposal to rectify the HVAC
problems.
On the complaint, the court entered an order awarding
plaintiff damages of $221,752.57, plus prejudgment interest and
costs of $42,377.58. With respect to defendant's counterclaim,
the court considered only whether plaintiff breached the
parties' contract. He found no evidence of fraud or
misrepresentation by plaintiff, rather the court determined
plaintiff "met the standard of good faith, honesty in fact and
observance of fair dealing." The court declined to credit
Greenberg's expert opinion as to any claimed economic damages,
concluding "the delays were caused by a number of factors which
Greenberg did not take into account." The trial judge dismissed
Defendant's counterclaim with prejudice.
On appeal, defendant argues the trial court erred in
concluding plaintiff had no liability as a result of the faulty
performance of the HVAC subcontractor and for failing to
properly secure the property from storms while work was
progressing. Finally, defendant argues plaintiff was not
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entitled to the twelfth draw under the contract. We turn to our
review of these issues.
The scope of our review of a non-jury case is limited.
Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011).
The findings on which a trial court bases its decision will "not
be disturbed unless they are so wholly insupportable as to
result in a denial of justice[.]" Rova Farms Resort v.
Investors Ins. Co., 65 N.J. 474, 483-84 (1974) (internal
citations and quotations omitted). On the other hand, although
a trial court's factual findings will not be overturned absent
an abuse of discretion, questions of law are subject to de novo
review. Balsamides v. Protameen Chems., Inc., 160 N.J. 352, 372
(1999).
Defendant first argues the trial court erred as a matter of
law in concluding the engagement of a subcontractor to install
the HVAC units shielded plaintiff as the general contractor from
liability for alleged resultant damage in failing to follow the
contract specifications and instead installing nonconforming
HVAC units. We reject defendant's characterization of the trial
court's legal conclusions.
Defendant focuses on one portion of the trial judge's
opinion, which mentions defendant's claim resulted from her
dissatisfaction with the performance of the HVAC subcontractor,
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Berry. In the discussion, the judge commented that if the HVAC
did not work properly, "it would be the responsibility of Berry
or the manufacturer of the product; and not [plaintiff.]" This
comment related to the causation question; that is, whether the
mold resulted from the efficiency of the units. It was not the
basis of the court's conclusion regarding plaintiff's liability,
as defendant now suggests.
"Disputes between contractors and owner[s] as to extra work
and changes on building or working contracts are as old as the
practice of contracting for such work and are a fertile cause of
litigation." Headley v. Cavileer, 82 N.J.L. 635, 637 (E & A
1912). The "fundamental difficulty" encountered in this field
of litigation is that "there is no statute requiring such
contracts . . . to be in writing[.]" Id. at 637-38. No matter
how "'solemn in form'" the original agreement, parties are free
to renounce or modify it in any way they see fit. Id. at 638
(quoting Cooper v. Hawley, 60 N.J.L. 560, 563 (E & A 1897)).
Therefore, a "writing requirement may be expressly or impliedly
waived by the clear conduct or agreement of the parties or their
duly authorized representatives." Home Owners Constr. Co. v.
Glen Rock, 34 N.J. 305, 316 (1961). See also Salvatore v.
Trace, 109 N.J. Super. 83, 103 (App. Div. 1969), aff'd, 55 N.J.
362 (1970) (observing that contracting parties can waive a
13 A-0347-10T1
writing requirement through their conduct). These aged
pronouncements reflect little has changed over time and aptly
describe what occurred in this matter.
The judge thoroughly detailed his findings regarding who
made the decision to alter the specified HVAC units once those
identified in the specifications were unavailable. In doing so,
he specifically rejected defendant's claims that the decision
was unilaterally made by plaintiff. Further, the trial judge
found defendant's suggestion that she was ignorant of the
problem was not believable and he credited the painstaking
testimony, supported by documentation, presented by plaintiff
and Berry. The court determined defendant knew of the problem
because plaintiff had discussed the "HVAC issues" with her on
"at least [six] occasions[,]" she selected the chosen unit and
authorized the change. Moreover, plaintiff delayed her decision
for almost a month, giving her ample opportunity to consult with
Shade or Steinman, the architect and engineer who drew the
original plans. Finally, the court found no evidence submitted
by defendant showing plaintiff breached the amended proposal
regarding the installation of the HVAC units.
These findings by the trial judge, including the
credibility determinations leading to his conclusion plaintiff
had not breached the parties' agreement, are "supported by
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adequate, substantial and credible evidence." Rova Farms,
supra, 65 N.J. at 483-84. The court's findings and conclusion
will not be disturbed.
Defendant next maintains plaintiff breached the contract's
implied covenant of good workmanship by failing to adequately
protect the property from storm damage. Defendant asserts she
relied upon plaintiff's express expertise, but the means
employed by plaintiff to secure the motel from storm damage
after removing the roof were performed improperly and not in a
workmanlike manner. Defendant argues the court erred in
requiring her to pay plaintiff to correct the damage caused by
its breach and maintains she is entitled to recover judgment
against plaintiff on this issue. We find these arguments
unavailing.
Absent an express guarantee of good workmanship, "the law
implies a covenant that the contract will be performed in a
reasonably good and workmanlike manner." Ramapo Brae Condo.
Ass'n, Inc. v. Bergen Cnty. Hous. Auth., 328 N.J. Super. 561,
576-77 (App. Div. 2000), aff'd, 167 N.J. 155 (2001); see also
McDonald v. Mianecki, 79 N.J. 275, 293 (1979).
In the first count of her counterclaim, defendant includes
a claim of breach of contract. The bases stated for the breach
include: the work performed and materials used were not in
15 A-0347-10T1
compliance with the plans and the work was not in compliance
with applicable construction codes and regulations. The court
found defendant's proofs on each of these issues was lacking and
denied relief, concluding defendant, not plaintiff breached the
contract.
The third count of the counterclaim asserts "breach of UCC
warranties." The trial judge specifically found: "The Uniform
Commercial Code claim in the [t]hird [c]ount of the
[c]ounterclaim was not pursued at trial and deemed abandoned by
the [c]ourt. The [t]hird [c]ount is dismissed with prejudice."
The fifth count of the counterclaim is the only claim
directed to plaintiff's alleged failure "to protect the interior
of the structure from [] exposure to the elements." The claim
asserts plaintiff was negligent. As to this issue, the trial
judge correctly noted defendant released plaintiff and his
subcontractor when she settled the matter with the insurance
carrier.
The release is limited to the negligence claims in count
five of the counterclaim and specifically reserves all other
claims between plaintiff and defendant. The question is whether
a claim of breach of the implied covenant of good workmanship
was pled and proven. We find it was not.
16 A-0347-10T1
In support of this issue, defendant suggests plaintiff
could have proceeded by removing smaller sections of the roof at
any given time. Additionally, she notes the use of tarps, wood
and ropes did not allay the wind gusts of the storms and the
property was damaged. From these facts, defendant concludes
that because the tarps did not hold, plaintiff's workmanship was
improper.
At trial, defendant's evidence regarding plaintiff's breach
of the contract was directed to its summer 2004 construction
stoppage and the alleged mold formulation from the flawed HVAC
installation. Defendant did not offer expert testimony opining
that the methods chosen to protect the property in the event of
a storm evinced a defect in workmanship (or merely was a result
of exceptional storm circumstances, as suggested by plaintiff).
In fact, there was no evidence offered to prove plaintiff's
workmanship in choosing the manner of roof removal, undertaking
piecemeal construction of the third-floor rooms and
weatherproofing the structure during construction, was improper.
Defendant's final argument urges reversal of the trial
court's conclusion that she, not plaintiff, breached the
contract when she failed to release the twelfth draw payment.
Before the trial court, defendant argued plaintiff never asked
her for the twelfth draw. This contention was soundly rejected
17 A-0347-10T1
by the trial judge, who found plaintiff's evidence credible. On
appeal, defendant now argues the completion of certain work,
which was not performed, was a precondition for the release of
the draw. Thus, her obligation to pay was not triggered. We
decline to consider this assertion, which was not raised before
the trial judge.
It is well-settled we "decline to consider questions or
issues not properly presented to the trial court when an
opportunity for such a presentation is available 'unless the
questions so raised on appeal go to the jurisdiction of the
trial court or concern matters of great public interest.'"
Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)
(quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super.
542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)).
See also Spinks v. Twp. of Clinton, 402 N.J. Super. 465, 479
(App. Div. 2008), certif. denied, 197 N.J. 476 (2009).
Affirmed.
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